Is a Health Savings Account Right For You?
February 5, 2008
The cost of health care, like everything else, is on the rise. However, if you have to go to the doctor, the emergency room, or even stay overnight, you can be in the poorhouse pretty quick, even if you have insurance. If you are not insured, you may have to sell your soul or your firstborn to pay for the coming bills. If this is how you feel, you might want to checkout a health savings account.
Back in 2003, President Bush signed a bill allowing Americans to start a Health Savings Account (HSA) to help offset the cost of potential and impending medical bills. So, if you set up payments into an HSA, you will not have to pay taxes on that money and you don’t have to worry about spending it all in a year’s time like you do with a flexible spending account.
For example, you have insurance through your work, but you have to pay a deductible plus a percentage after that, until the bill is so high you will be living on the street before the full-coverage kicks in. So, what do you do? Well, if you set up an HSA, you can put the deductible and anticipated percentage amounts in a savings account, in the event you or a family member should need medical care.
The problem is figuring out all the rules and regulations, because some people do not qualify for the plan, and like any other government idea, someone had to kill a forest of trees to put it all on paper. For example, if you are already on Medicare, VA benefits, or have Tri-Care insurance through the military, you will not be eligible for an HSA.
However, it is worth checking out. Go to the US Treasury site and read the digital booklet. It may take a little time to figure out. But, if you can put money aside for a rainy day, and have it be tax free, I say it is worth your effort. After all, you may be healthy today, but an accident or age can change the scenario all too quickly.
With tightening budgets, I know people are having a difficult time just meeting the daily expenses. Nevertheless, speaking from personal experience, you cannot foresee a car accident or a cold that progresses to bronchitis or pneumonia. As my grandma says, “Life happens while you are making other plans.” So, before life happens, plan for the day you are going to need medical care.
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